Monday, December 05, 2005

Turns out...

...that finals are bad for blogging. And, also, that discussing Bayesian updating of subjective probabilities without resort to any mathematical notation is mildly difficult, though kind of cool. This in the context of Pauly's 1980 book "Doctors and Their Workshops" where, in chapter 4, consumers put more or less weight on physicians' advice depending on their past history with the physicians' advice. The model is a bit goofy (you assume a constant marginal product of medical care given a level of health and you assume that consumers know their level of health, but you assume that the table matching a level of health to marginal product of medical care is not widely known). Yet it is ever so inventive to make the demand side smarter than most models would have it be.

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